Plan Upends Willets Vision

By

Eliot Brown

Updated May 16, 2012 11:47 p.m. ET

New York City officials are shaking up one of Mayor Michael Bloomberg's key development priorities, putting off for years the creation of a new neighborhood in Queens' Willets Point and calling first for a large retail center next to Citi Field, said people familiar with the matter.

The tentative deal between the city and the developers—the principal owners of the New York Mets and the developer Related Cos.—upends the original vision for Willets Point, a project for which the city has committed $400 million and cleared the use of eminent domain.

Instead of housing and retail, parking lots for Mets fans would initially replace dozens of businesses in an area known as the Iron Triangle to the east of Citi Field. The new neighborhood is still intended to be built on that 61-acre swath of land, but years later and only after a new shopping center is built on a parking lot to the west of the stadium.

The city had sought bids for the project, initially conceived in 2007 as another in a line of Bloomberg-backed housing developments on which construction would begin before the mayor left office. But people familiar with the matter said the housing and retail project has become unfeasible as once envisioned, as developers have been unwilling to fully commit given the site's challenges.

The site—an industrial area full of car-repair shops that officials have sought to develop for decades—would cost tens of millions of dollars to clean up, and developers were concerned about being able to quickly lure residents and retailers to the unproven area.

Now, Related and Sterling Equities—controlled by Mets owners Fred Wilpon and Saul Katz—will take a shot with a revamped plan that delays the housing aspect and introduces a larger retail component next to a world-famous professional sports complex. The USTA National Tennis is also nearby.

The first step for the developers would be to take on a costly 20-acre environmental cleanup and build the new parking lots for the stadium, the people said. They would also be required to build a hotel and a small amount of retail just to the east of Citi Field.

Then they would be able to build more than 800,000 square feet of retail on the parking lots to the west of the stadium. Only then would construction begin of the new neighborhood first envisioned by the Bloomberg administration, with the construction of the 400 apartments and 680,000 square feet of retail. That aspect of the project could grow, the people said.

But the deal injects new uncertainty into the development of the area, for which the city has cleared the use of eminent domain to remove holdout landowners. The agreement calls for the developers to make a $35 million payment to the city if they don't begin construction of the final housing piece by 2025—a relatively large penalty for a development deal, the people said. The developers would also be in danger of being removed from the project if they didn't come through by then, the people said.

The city believed the plan was the best of its options. The other three bids it received each called for greater levels of additional subsidy or a smaller amount of development, along with other risks, according to people briefed on the proposals. None fit the guidelines of what the city was seeking, and the Related-Sterling plan lays the ground for a larger overall development—sandwiching Citi Field—if completed.

The new details are sure to embolden critics of the project and existing landowners in Willets Point, many of whom have long said the city's project wasn't feasible. "The small businesses don't want to leave and will continue to fight any efforts to take their property," said Michael Gerrard, an attorney representing remaining business owners in Willets Point.

The changes also open it up to the potential for more alterations: part of the new plan must be approved by the City Council given that the extent of the proposed changes would trigger a new environmental review.

The plan was first approved by the City Council in 2008, after a hard-fought process in which the city committed to doing large amounts of low-income housing and made costly deals with landowners.

Many giant development plans have been wounded or stalled by the downturn, such as the Atlantic Yards basketball arena and housing development in Brooklyn. In a report released on Wednesday, the Regional Plan Association, a nonprofit urban research group, said many of the city's largest projects, from Battery Park City to the revamping of Columbus Circle, have dragged on for years longer than initially projected.

"Most had several false starts and went through multiple plans before development was approved and construction started," the report said. "Complete build-out of approved projects generally stretched over several years, even decades, and multiple business cycles."

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